This master's thesis investigates the connection between profit margin, return on assets, long-term debt, and price-to-earnings (P/E) ratio and they relate to dividend. The study examines whether companies with increasing dividends and companies with decreasing and constant dividends have significantly different effects on the P/E ratio. The results show that profit margin has a positive and statistically significant impact on the P/E ratio in companies with increasing dividends, demonstrating the significance of profitability in affecting investor valuation. Long-term debt and return on assets, however, do not appear to be significantly correlated with the P/E ratio in this group. In contrast, none of the financial performance variables have a major impact on the P/E ratio in companies with decreasing and constant dividends. The research highlights that it is important to take dividend distribution into account as a differentiating element when examining the connection between financial performance and the P/E ratio. However, the study cannot accept or reject the null hypothesis entirely as the results lack statistical significance.
| Identifer | oai:union.ndltd.org:UPSALLA1/oai:DiVA.org:umu-212915 |
| Date | January 2023 |
| Creators | Sharin, Samara |
| Publisher | Umeå universitet, Handelshögskolan vid Umeå universitet |
| Source Sets | DiVA Archive at Upsalla University |
| Language | English |
| Detected Language | English |
| Type | Student thesis, info:eu-repo/semantics/bachelorThesis, text |
| Format | application/pdf |
| Rights | info:eu-repo/semantics/openAccess |
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